It's a Numbers Game: The Numbers Behind Trump's Tariffs with Breitbart's John Carney

Summary

Podcast Summary: "It's a Numbers Game: The Numbers Behind Trump's Tariffs with Breitbart's John Carney"

Podcast Information:

• Title: The Clay Travis and Buck Sexton Show
• Host/Author: Premiere Networks
• Episode Title: It's a Numbers Game: The Numbers Behind Trump's Tariffs with Breitbart's John Carney
• Release Date: March 17, 2025

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Introduction

In this episode of "The Clay Travis and Buck Sexton Show," host Ryan Gradusky delves into the economic implications of former President Donald Trump's tariff policies. Joined by John Carney, an editor at Breitbart News specializing in economic and tariff-related issues, the discussion dissects the efficacy, motivations, and repercussions of Trump's approach to trade deficits and international tariffs.

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Understanding Trade Deficits and Tariffs

Ryan Gradusky opens the conversation by highlighting the prevalent narrative in mainstream media that attributes economic instability and potential recession to Trump's tariff policies. He references a Breitbart Business Digest piece where Carney dismisses these accusations as "laughably lazy" (Timestamp: 15:47).

John Carney counters by explaining that the market's recent sell-off isn't solely due to tariffs but rather a "selective retreat of high-risk, high-valuation stocks" (16:28). He emphasizes that the anticipation of tariffs was already priced into the market, and the actual impact didn't match the feared economic downturns. Carney cites Michael Lewis's "Liars Poker" to illustrate how attributing market movements to vague factors like tariffs can be misleading (16:58).

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Historical Context of US Trade Deficits

Carney provides a historical perspective, noting that from 1870 to the mid-1970s, the United States enjoyed a steady trade surplus, averaging about 1% of GDP annually (17:30). However, following the signing of NAFTA by President George H.W. Bush and China's entry into the World Trade Organization under President Clinton, the US slipped into persistent trade deficits, particularly with China, which ballooned to nearly $400 billion by 2017 (18:10).

He attributes the move towards a service-based economy and the outsourcing of manufacturing jobs to these trade agreements, leading to significant job losses in the US manufacturing sector (18:44). Carney underscores that while tariffs under Trump reduced the trade deficit with China from $418 billion to $307 billion by 2020, the overall US trade deficit increased by $119 billion during his presidency (20:02).

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Economic Impact of Tariffs

Gradusky challenges the mainstream media's portrayal by pointing out that despite the imposition of tariffs on goods like steel and aluminum, inflation rates remained low, and consumer prices for products such as Coca-Cola and Campbell's soup did not spike as predicted (19:13).

Carney explains that tariffs primarily impacted corporate profits rather than consumer prices because companies faced increased costs but were offset by significant corporate tax cuts (21:00). He argues that protectionist measures protected the steel and aluminum industries without leading to widespread inflation, contradicting the media's dire predictions (21:54).

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Trade Deficits and Government Growth

A pivotal point in the discussion is Carney's assertion that sustained trade deficits have directly contributed to the expansion of the US government. He elaborates that with $20 trillion in trade deficits over 50 years, income leakage necessitates increased government intervention to fill the economic void (24:07). This relationship between trade deficits and growing government size challenges the libertarian view that trade deficits are benign.

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Tariffs as a Strategic Policy

When asked about the effectiveness of tariffs beyond being a mere negotiating tool, John Carney presents tariffs as a component of a broader economic policy aimed at reindustrializing America. He emphasizes the necessity of reducing dependency on countries like China for critical industries, arguing that tariffs are essential for fostering domestic production and national security (34:08).

Carney also discusses the complexities of imposing tariffs on allies such as Canada and Mexico, highlighting incidents where Canada retaliated by leveraging its own resources to influence US policy (38:15). He warns that relying on allies for critical imports can be precarious in times of geopolitical tension.

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Demographic Shifts and Economic Dependencies

Gradusky brings up Canada's demographic changes under Prime Minister Trudeau, noting increased Asian immigration and questioning how this might affect future trade and political alliances. Carney responds by asserting that nations are dynamic and alliances can shift, underscoring the importance of not relying on any single country for essential imports (40:50).

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Reindustrialization Strategies: Place-Based vs. Laissez-Faire

The discussion shifts to strategies for reindustrialization. Gradusky contrasts Trump's laissez-faire approach, which yielded 400,000 manufacturing jobs, with Biden's place-based initiatives like the CHIPS Act. Carney acknowledges the inevitability of place-based economies in modern contexts but advocates for leveraging market forces over targeted government intervention. He supports the idea of rebuilding industries in economically distressed areas, emphasizing the advantage of available labor pools (43:50, 46:33).

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Conclusion and Final Thoughts

Wrapping up the conversation, John Carney reiterates the importance of addressing trade deficits holistically, particularly with adversarial nations like China. He advocates for policies that reduce economic dependency and enhance domestic production capabilities to ensure national security and economic stability (48:25).

Carney encourages listeners to engage with his work through the Breitbart Business Digest and his social media channels to stay informed on economic policies and their impacts (47:07).

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Notable Quotes

• John Carney (15:47): "Any accusation that tariffs are all to blame are, quote, laughably lazy."
• John Carney (16:28): "Everybody knew Donald Trump was bringing tariffs to the table. So why the sudden panic? The tariff narrative doesn't really make sense."
• John Carney (24:07): "The trade deficit is one of the primary causes of the growth of government in the United States."
• John Carney (34:08): "Tariffs are not just a negotiating tool, but part of a broader policy around the idea of reindustrializing America."
• John Carney (46:33): "Opportunity to build new industries is where there is excess labor in some of these places."

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Key Takeaways

1. Market Dynamics vs. Tariff Impact: The stock market's volatility is attributed more to rotations out of overvalued stocks rather than the direct impact of tariffs.
2. Historical Trade Surpluses: The US maintained trade surpluses for a century before trade agreements like NAFTA and China's WTO entry shifted the balance to persistent deficits.
3. Tariffs and Inflation: Contrary to mainstream predictions, tariffs did not significantly drive up consumer prices or inflation.
4. Trade Deficits and Government Growth: Persistent trade deficits contribute to the expansion of government size as they necessitate increased intervention to compensate for income leakage.
5. Strategic Use of Tariffs: Tariffs are advocated as strategic tools for national security and economic independence, especially concerning adversarial nations.
6. Reindustrialization Approaches: A balanced approach combining market forces with targeted government interventions is essential for effective reindustrialization in economically distressed regions.

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Conclusion

This episode provides an in-depth analysis of Trump's tariff policies, challenging mainstream media narratives and offering a nuanced perspective on trade deficits, economic stability, and national security. John Carney's insights highlight the complexities of international trade and the strategic importance of tariffs in shaping America's economic future.

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For more insightful discussions and analyses, subscribe to "The Clay Travis and Buck Sexton Show" on your preferred podcast platform.

Transcript

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[Ryan Gradusky]

Welcome back to A Numbers Game with Ryan Gradusky. I am your host and data guru Ryan Graduski. If you can tell by the title. Thank you for being here Again. This podcast is now about three months old and if you're enjoying my show, please please like and subscribe and give me a five star review wherever you stream your podcast. It really means a lot to the show. I'm excited to announce that starting next week, we're going to start a question and answer portion to the podcast. The last 10 minutes or five minutes of every show, I'll be taking your questions on politics, the economy, stories from the campaign trail, who I hate in politics. I'll even try to answer your question on sports, but keep those light and abbreviated. Whatever you want to know. If I can answer it, I will and I'll answer my most honest and best ability. Send your questions with the chance for them being answered on my podcast. Email them to ryanumbers game podcast.com that's plural numbers ryanumbersgame podcast.com and maybe I will be answering your questions next week. Okay, now to this week. In 1970, Edwin Starr sang war what is it good for? Absolutely nothing. But what about a trade war? That's the theme for this week's show. President Trump's latest announcement of new tariffs has the markets jittering and even leaders in allied countries are attacking the moves. Democrats are calling the tariffs attacks on the working people, while Republicans are saying that that's just a negotiating tactic to get foreign countries to remove their tariffs on American made goods. So where is the truth within the narrative? Let's start off with some data and some history. Tariffs are attacks on imports and exports of goods. So it's worth looking at which countries are America's largest trading partners. As of 2024, America's largest trading partners is the European Union. We do about a trillion dollars a year and trade with them. Mexico at 840 billion, Canada at 762 billion, China at 500 billion, DOL 182 billion and then Japan at 228 billion. These five countries are our largest trading partners, but the US has a negative trade imbalance with all of them. That means we import more than we export and we're more dependent on them for their products than they are for ours in the four countries. And the European Union, which is not a country, it's a collection of countries. But within these five trading partners, our trade imbalance is nearly $835 billion a year, with the largest trade imbalance coming from China at 295 billion. America's trade imbalance is fairly well known at this point. We've had a long de industrialization process in many sectors of the economy and we've become a service based economy. I think it's pointing out though, this isn't true for all nations. The United States does run trade surpluses. With a bunch of countries like the United Kingdom, Brazil, Singapore, Australia, Colombia and Saudi Arabia, we actually have a trade surplus overall with Latin America. And certain industries like agriculture, food and petroleum have an overall population positive trade surplus, meaning we ship more products than we take in in those sectors of the economy. The industries that we are most reliant on the world for are computers, minerals, transportation, apparel and electrical equipment. Across the United States, top 30 trading partners though, we run a $1.15 trillion a year deficit. Now, it's not like some developed nations, you know, don't run trade deficits. A lot of countries have trade surpluses. Major countries like China. China runs a 1 trillion, a nearly $1 trillion a year trade surplus. Australia has a about $140 billion a year trade surplus. Even New Zealand and Italy run trade surpluses. So Trump is coming into office, seeing these other countries in the world running positive trade surpluses and saying, why don't we have the same. It's not like that. We never did. Certainly the America that Donald Trump grew up in didn't experience trade deficits for about a century. Between 1870 and 1970, I think it was 1974, America had a steady trade surplus, on average about 1% of GDP per year. This all while the United States had very strong protectionist trade policies with large tariffs lobbied on foreign goods. Sometime in the mid-1970s, America slipped into a trade deficit, but it stayed around 1% of GDP until the mid-1990s. That's when America's trade deficit fell to 4% of GDP. What happened? President George H.W. bush signed the US into the North American Free Trade Agreement, which is NAFTA. The official estimates are that about between 600,000 and 900,000 US manufacturing jobs moved to Mexico to take advantage of cheap labor and those products that used to be made in America back to Americans. And they'd say, you know, you're making a huge deal, you're getting it for a cheaper price. That's a big win for Americans. But they were losing their jobs. Compounding this problem was at the end of Bill Clinton's presidency when China was allowed to join The World Trade Organization and President George W. Bush made it a most favor a permanent most favored trading partner. At the time, the US had an $84 billion trade deficit with China, which ballooned to nearly $400 billion by 2017. It is now on 300 billion DOL. It was part of this post Cold War strategy to invite China into the global economy while isolating Russia, believing China would be end up embracing democracy and liberalism. And you can see how that turned out. Once China was open to the world markets, more than 2.4 million manufacturing jobs headed overseas in just two years. About 30% of those lost manufacturing jobs were caused by increased trade deficits, according to the study by the Progressive Policy Institute. That would eventually increase to 3.7 million lost jobs by 2018. The number of manufacturing jobs in the US fell from 19 million in 2000 to 12.6 by 2009. Donald Trump is not what anyone would call an orthodox politician. He's changed his mind on positions over and over and over again, sometimes sometimes in the same speech several times. But one major consistency during his life is his feeling the United States and its people have been ill served by our free trade agreements and we've had to pay dearly for them. That's tally Trump comes to the White House with in today and 2017 when he almost immediately started a trade war with China. In 2018, Trump increased imports on Chinese solar panels and washing machines and then increased steel and aluminum tariffs across the entire world. And America's trade deficit with China did decrease substantially from 418 billion to about 307 billion in 2020. President Biden actually kept most of those tariffs in China and even increased them slightly, which further reduced our trade deficit. But while our trade deficit with China has decreased, our overall trade deficit with the increased by about 119 billion during Trump's presidency. So while he wasn't able to reduce the trade deficit, he did make good on one promise to bring back manufacturing between 2017 and 2020. I'm not including the COVID years because that's not the same thing. That wouldn't be fair. The economy added 400,000 manufacturing jobs. But all these trade wars during the first term, they didn't lead to the higher prices that many people fear. Monger A fact check.org summary of Trump's first term in office found that he had one of the lowest inflation rates of any recent president. And paycheck substantially for working class Americans rose faster than the rates of inflation. So fast forward to today. The stock market is turbulent a lot of people are blaming Trump's rhetoric around tariffs. Many investors are nervous and the media, who mostly hate Donald Trump and Republicans are basically openly rooting for a recession. They're saying President Trump's going to destroy the economy and increase prices on vulnerable Americans because of his tariffs. And there's mixed signals in the market. You know, you could basically choose your own journey depending on your political ideology. In Trump's favor is the fact that inflation has slowed road since he came into office, his first full month in office. If you strip out food and energy costs, inflation is down significantly. Mortgages are down, gas prices are at a three year low. But working against Trump is the fact that the stock market's down big time since he was inaugurated. The Dow Jones is down nearly 4,000 points since January 20th. The Federal Reserve bank of Atlanta expects the economy to contract by 2.4% in the first year. Most of the uncertainty of the market is coming from allegedly from a rhetoric around Trump's trade wars. Which gets us back to the beginning of the segment. Since he's been sworn in, President Trump has issued tariffs or threatened to issue tariffs against Canada, Mexico, Colombia, China, the European Union and other countries in the world that have reciprocal tariffs. Democrats are blaming this and saying it's on Trump and saying that this is a tax on the working people. Republicans are saying this is just a negotiating tactic and it will all go away. Remember, most countries in the world do have tariffs on American made goods. In the case of Columbia, Trump used the tariffs justice or the threat of tariffs justice. Make them take their illegal immigrants back and no tariffs were ever sent. That's where publicans are saying, oh no, it's just a threat to make them change their ways. But what if tariffs aren't just a negotiating tool, but part of a broader policy around the idea of re industrializing America and scraping back the decisions made in the 1990s. Can tariffs be used as a force of good to bring back jobs and to sit there and get things made in America and less dependent on our world's largest adversary? You're listening to it's the Numbers Game with Ryan Graduski. We'll be right back after this message. At Amica Insurance, we know it's more than just a house. It's your home. The place that's filled with memories. The early days of figuring it out to the later years of still figuring.

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Our guest. This week's articles are a must read in my household. John Carty is an editor at Breitbart News who writes about tariffs in the state of the economy and says something that a lot of people in the mainstream media do not say. John, thank you for being on with me.

[John Carney]

Yeah, thanks for having me, Ryan.

[Ryan Gradusky]

So my first question, I want to ask you about the market and Trump's tariffs. If you read and listen to any major outlet, Trump's creating instability. And we may be on the presses of recession. I mean, I hear of this from people on CNN or MSNBC all the time. And the Federal bank of Atlanta has decreased GDP expectations. You had a different take in Breitbart Business Digest, which, by the way, Brightner, Breitbart Business Digest is fabulous. It's amazing. You say that any accusation that tariffs are all to blame are, quote, laughably lazy, end quote. And what you're really seeing is selective retreat of high risk, high valuation stocks. Can you explain that?

[John Carney]

Yeah. So first of all, it wouldn't make sense for there to be a sell off in the end of February, beginning of March based on tariffs. Everybody knew Donald Trump was bringing tariffs to the table. So, and we knew that. You know, maybe you didn't know he was going to win the election, so maybe you didn't know it last August, but the market did really well between November and December and January. So why the sudden panic? The tariff narrative doesn't really make sense. It is, I think it is a little bit. And I, in the Breitbart Business Digest piece you related to, I end with a quote from Michael Lewis's book Liars Poker, where when clients would call up and say, like, why is the market selling off? And they had no idea why the market was selling off, they would always blame the Arabs. That was their Go to thing there was a the Arabs are selling. That's what's bringing it down. The best part about that was that it was. There was no way to disprove. Right. It was there. Nobody knew why the market was doing anything. But also nobody knew why that what Arabs, meaning oil money, was doing with its money. And so you could just say, oh, the Arabs are selling. And people would say, okay, that makes sense. Tariffs are the new Arabs. They are what the media goes to when it wants to explain what's going on in the markets. I think what's really happening are two things. One is a rotation out of the stocks that were really hot over the last couple years. Now, that should be expected when you have a very different government coming in. Right. That the stocks that did well under Biden should not necessarily be expected to do really well under Trump. And under, not just under Trump, but under a Republican House majority, a Republican Senate majority, you would. And all of the regulators changing hands, you would expect there to be some change. A lot of these stocks, like, I mean, people before, even before the election were starting to worry about the valuations. You have these stocks that were trading at multiples to earnings that were incredible. And I think what we're seeing is those coming down.

[Ryan Gradusky]

Right. A lot of tech stocks did that. Yes.

[John Carney]

Right. So that's the other part of this. Right. Why would these tech stocks plummet because of tariffs? That doesn't really make a lot of sense. They're not the ones who are going to be hit either with our tariffs or even with the retaliatory tariffs. So what, you know what's going on there? The. It's a convenient narrative, but it doesn't match the details of what the market's doing. Right.

[Ryan Gradusky]

And during Trump's first term when he did tariffs on China, there was a lot of stories in the mainstream media and I just want to read you a few headlines. NPR said Trump steel tariffs on an aluminum tariffs could raise the price of beer, candy and cars. Market Watch said yes, Coke will cost more under Trump steel tariffs. CNBC said Campbell says tariffs will make soup cans more expensive. Fast forward to today and you're seeing basically the same headlines, but inflation is down and the corporate producer price index for final demand last month declined by 0.1%. So did. I don't think that it did. And maybe I am wrong though, but I don't remember Coke and tuna and all the rest of the canned food spiking. And why and how is inflation actually decreased in Trump's first full month? In office.

[John Carney]

Right. So the. You're absolutely right. All of those stories were amazing. I actually, it led me to track what was going on with consumer prices every month throughout. Throughout the entire first Trump administration. So I became an expert in the way all of these inflation things work because I was very curious. Look, there's all these claims going to push up prices. I didn't think that would happen. And it didn't. It just, I mean, the price of a can of Coke didn't go up by very much at all during the Trump administration. The aluminum tariffs did push up the price of aluminum. I'm like, don't get me wrong, like, the price of aluminum and the price of steel went up. So why didn't cars get more expensive? Well, the main reason is because they didn't give people more spending power. What causes inflation is an increase in the money supply. So you have money growing faster than the amount of goods out there. So that doesn't happen. So where did the. So where. So who paid for them? Well, for the steel and aluminum tariffs, I'll say it was the companies like Coca Cola, they re and Campbell's and Ford Motors. They actually, it ate into their profits a little bit. But guess what? That policy was coupled with a massive corporate tax tax cut. So, yes, they suffered a little because of tariffs, but they got a much bigger boost. So overall, the companies were better. We actually protected our steel aluminum industry. So none of the, like, the horror stories that were going to happen. And in the end, by the way, a lot of those outlets, I remember the Washington Post actually wrote a whole article about this. At the very end, they finally admitted, oh, yeah, it turned out the tariffs didn't cause inflation.

[Ryan Gradusky]

I remember one time we were at a bar and you said to me something to the effect of, like, there will never be like a $20 can of tuna because no one's going to pay that. So what there is, is there's always just a limitation in the amount of money willing to be purchased. And so because they don't have that much money, they're not going to buy that. They'll never charge that much.

[John Carney]

Right. Well, and so one way of thinking about this is businesses already charge as much as they can. It's not like they're sitting around being like, man, I could probably charge everybody two more dollars, but I'm not going to unless my costs go up. Right. That's not the way it works. They charge the maximum they can to get the most sales they can make. And unless something has enabled their customers to Pay more. They're not going to charge more. They can't.

[Ryan Gradusky]

Right.

[John Carney]

It doesn't work. And by the way, competition works in this way too. So if you have a Target and a Walmart in your town and you put a tariff on China, right. And suddenly, you know, Target and Walmart are paying a lot more for all the stuff on their shelves because they're getting a lot of it from China. Can they raise prices? No, because if Walmart raises prices, everybody buys that stuff from Target. If Target raises prices, everybody buys that stuff from Walmart. So. And both of them know that they're in fierce competition for market share. So they actually neither of them raise their price because they know that would give their competitor the opportunity.

[Ryan Gradusky]

And if you, if you look at trade deficits, and I mentioned trade offs earlier in the podcast, if you wrote a column which was very interesting because if you talk, if you listen to like more of, I would guess the, you know, classic free marketeers, trade deficits are not a bad thing because we get cheaper prices. So what does it matter, you know, if we outsource all of our goods? You wrote all of our production. Rather you wrote in a column that trade deficits are actually responsible for more big government. Well explain that because it goes against a lot of conventional thinking. And you wrote between 1974 and 2020, for that 50 year period America ranked of $20 trillion in trade deficits.

[John Carney]

Yeah, I think people don't even have an idea of the scale of the trade deficits that we've been running. First of all, the, the like economic theorists would tell you that that shouldn't even be possible. Right. That, that trade deficits, you, maybe you'll run one one year, but then the next year your, you know, prices will adjust and you'll sell stuff to other. To run 50 years of trade deficits means that something has gone wrong. Somebody is either taking advantage of the system or you're being played for the sucker or both. Then that's what's happened. So to your point of how it feeds big government. So one of the things that happens is when you have a lot of income leaking out, remember Everybody in the US's income is based on somebody else's spending. So when we are spending more money on buying foreign products than anybody is buying our products, incomes must be declining because it means that we are not spending enough to support the level of income we have. So what happens when incomes are declining? Either lots of people start losing their jobs or what actually happens is the government grows, the government fills in the holes created by the trade deficit. This is why you've had a enormous run up in budget deficits while you had an enormous run up in trade deficits. They are complementary. So a lot of these people consider themselves libertarians and small government advocates who say, oh, don't worry about the trade deficit. They're wrong. The trade deficit is one of the primary causes of the growth of government in the United States. It's one of the reasons the government has grown so large. And it's also why we can bring it down under Donald Trump, because if we bring down the trade deficit, the demand for a larger government will go away.

[Ryan Gradusky]

Well, so during Trump's first term, the trade deficit with China did decrease, I think by $100 billion, but trade deficits overall increased by $100 billion. So what was missing from the calculation the first time and what in your mind, if you were advising the president, what would you say would need recalculate in order to overall reduce our trade deficit? Not with just one specific country.

[John Carney]

Right. Well, so I would put it in two ways. One, we do need to reduce our trade deficit with one specific country, meaning China. China is a bad actor in the world. They. And we need to address China. I would like to see right now, frankly, the Trump administration is way too optimistic about our future with China. China. They are.

[Ryan Gradusky]

I, I agree, I agree with you. Yes. 100.

[John Carney]

I mean, they think we're going to work it out and China will become like a nice country, you know, and.

[Ryan Gradusky]

We'Ll, you know, this is the overall philosophy of American foreign policy for the last 35 years. It's just, be nicer to China and they'll, they will catch up to us. It's never worked.

[John Carney]

No, it's never worked. And the Trump administration has a slightly different view. They don't want to just be nicer, but they still think that through tariffs and through diplomacy that they will change China. So this is actually not just 50 years. There was a really interesting book whose name I forget, but it was written by a guy who used to be a big shot at Merrill lynch that basically showed that for 150 years, this has been the Western delusion about China, that we were going to change China. You know, Christian missionaries going over there believed they were going to change China. All through our history with interactions with China, we thought, well, you know, they're a brilliant, sophisticated culture. They'll see the, the glories of the ways of the west and they will come along. It turns out Chinese aren't like that at all. They like their ways.

[Ryan Gradusky]

It's.

[John Carney]

I mean, that's how they're going to be. Right? They're going to be Chinese forever. That's wrong. So. But I do think that the.

[Ryan Gradusky]

What?

[John Carney]

Eventually we're going to have to say that we need to cut most of our trade off with China, that we cannot be economically dependent on them. I don't care if they're going to make the tiny little hotels for Monopoly games, fine, cool, whatever, but, but for anything that's important, including like stuff like just household furniture, we should not be getting it from China. And there, and there may be a little short term adjustment in that where the trade deficit doesn't go down, but it relocates.

[Ryan Gradusky]

Right, Right.

[John Carney]

I'd rather buy stuff from India than buy it from China. I think that's actually progress.

[Ryan Gradusky]

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[Ryan Gradusky]

So I was funny, I was talking to a congressman, U.S. senator, like, last week, and I just said to them, you understand that if the Defense Department of the Pentagon said he we're only going to buy medical equipment that is 100% made in America. Well, guess what? All of our medical equipment, they will relocate overnight to the United States because the most lucrative thing on this planet is a government contract. Everyone's dying for one. So if you said, hey, we're only going to build, buy aspirin from, you know, America, then we'll just, we'll start making it. I do you, like, agree with that assessment?

[John Carney]

Or 100%. It's totally crazy that we have these things where. And aspirin's a great example, but you could go through so many things where we're actually dependent on imports for things that we need for national security. And it makes no sense at all. If a world war broke out, we would very quickly discover that we're not getting that stuff from abroad anymore. You know, that we would be even from people who wanted to send it to us. Right. Submarines would be sinking the ships. We, we cannot be dependent.

[Ryan Gradusky]

Well, we had Covid and there was no baby Tylenol in America because there was a. Shortages, mass shortages. Oh, there was no baby food. Like, I mean, there was issues with major, major things because about. And we had people judge as Secretary of Transportation, which is the second worst thing next to Covid. So a lot of Republicans in defending Trump on tariff tariffs make the comment that it is just a tool to, you know, to basically pressure. It's a negotiating tool just to pressure other countries. And we saw it in the case of Colombia where they weren't taking their illegals back. So he threatened tariffs and then they started taking their legal back. I understand that, but it is more than a tool. It is a policy, though, an economic policy.

[John Carney]

That's right. Right.

[Ryan Gradusky]

Could you explain why it is not just a tool that could actually be used as a positive policy? Because tariffs always have the worst rap in the entire.

[John Carney]

Yeah, they do. And so what I would say is it's really good to look at tariffs in three different ways. One is the one you were just talking about, which is as diplomacy, we can use the world's desire to have access to our consumer market as a tool. We can say, look, if you do the things we're requiring you to do, take back your illegals, help us in some other issue, then you can still have access to the US Markets. If you're not going to help us out, you're not going to get access. Access. So that's. So that's the diplomacy tool number two, I think is creating a better trade deal for the US So this is more of, I would say, like what will get derided as classic protectionism, which is to say, look, but it's not classic protectionism, but the. You. The rest of the world runs a mercantilist policy against the U.S. they, their economies depend, and this is true of China, but it's true of Germany, frankly, it's true of countries all over the world. Their economies depend on them being able to produce more than they can consume. So that would be a dumb thing to do if they didn't have what you, what Scott Besant, Treasury Secretary called the buyer first and last resort, meaning the United States States, we're the dumping ground for the excess production of the rest of the world. That's. They keep their citizens employed, they keep their incomes up, they keep their welfare states so lavish because they can sell stuff to us, what we're saying, and they won't buy it from us because then they wouldn't run this imbalance that allows them to support their, their lavish social states in the way they want to.

[Ryan Gradusky]

Yeah. You know, it's funny, I have cousins who live in England and they, when they come to America, they like, load up on Twizzlers because our candy is so expensive in the UK they're like, no, it's like £20 to buy Twizzlers. And they're like, you. We have, then that was my first cycle was like, oh, it's not just, you know, you just move abroad and it's the same exact thing as here. They do have immense tariffs on, on non American. And we have. Those are favorable products in Canada. In Canada, like, they have their own television system where you only have Canadian TV shows. So they have like the Canadian version of Blues Clues that only kids could watch instead of the American version to protect their industries. Can you explain? Because I understand tariffs on China and on Mexico, I don't understand them as heavily on Canada, and I think that's where a lot of people are having a lot of questions. Can you explain why we're pushing tariffs on China? I'm sorry, in Canada? And what's the end goal?

[John Carney]

Yeah, so actually this is, this fits in perfectly because the third branch of, of trade, of tariffs, but also of trade barriers in general, is very important national security industries. So the main tariff Donald Trump wants to put on Canada actually has very little to do with. I mean, look, some of it is they treat our dairy farmers unfairly. They, they do, you know, so we would like them to change that. But the main thing is we actually have industries that we absolutely need to be American industries. Steel and aluminum. Right. Those are the two big metals tariffs. When Trump first put those on and they applied to Canada and Mexico, a lot of people's objection was like, well, why would you need to do that? Why do we need a steel industry at all? We could just buy all the steel we want from Canada. They're our ally, they're our neighbor. You know, what's the big deal? You know, how could they be A national security threat. We're never going to war against Canada. Canada. That sounds really plausible until you see what just happened. Right. We had a dispute over other parts of trade with Canada, and Canada said they, you know, the. Whatever they call it, the premier of Ontario. Right. It's really the governor. Right. They.

[Ryan Gradusky]

Right. It's their version of a governor.

[John Carney]

Yes, State of Ontario.

[Ryan Gradusky]

But it's a territorial. Yes, it's a federal system, so it's different.

[John Carney]

Yeah, but, but he said, look, we're going to raise your electricity prices, and if you keep going, we'll cut you off from electricity. That actually ironically proved Donald Trump's points about steel and aluminum, that Canada is not a reliable supplier of these things. If we have a dispute, they are more than willing to attempt to shape our policy with our dependency on their. So look, Canada is. We. Let's say we go to a war that Canada doesn't support. Right. Do. Do you believe that Canada will continue to supply us with steel that we use to make tanks to invade a country that Canada doesn't want us to. Let's go even the other way. What if we decide we don't want to fight a war that Canada wants to. And they say, you know what, since you're not willing to use the steel you buy from us to invade, I don't know, Ukraine, wherever, we're going to cut you off from steel until you adopt the policy that we think you should, that we. They will do this. And by the way, I'm not mad at them about that.

[Ryan Gradusky]

Right. Well, it's the international interest that makes sense. But you know what? I just, I just thought of something while you're talking, and I'm looking up, as we're speaking, you know, Canada for Canada has had one of the sharpest demographic changes of any nation in the history of the world under Trudeau's leadership. Trudeau has, like, wildly changed the demographics of Canada in a fundamental way by opening the floodgates to Asian immigrants. I think that your population increased by like 20%, 25%, and, like, in a matter of a decade, all through sheer immigration, primarily from China and from India. And if we are ever in a conflict with those nations, it would not. I mean, and they have a. They have a Chinese Canadian leader, Prime Minister. I guess maybe it wouldn't be unforeseen that they would sit there and put pressure on us not to maybe be supportive or be, you know, unsupportive, you know, in that case, because I think people have very fixed opinions of what the world Looks like from whenever they were coming up and growing up in the world. So you think that everyone in Canada looks like the cast of Shit's Creek, but it's just, you know, but it's, it's changing remarkably over the course of, you know, the last decade even.

[John Carney]

And I would say even with. So you're right about demographic shifts. Could definitely change the attitude of their nation. But also, look, nations change over time, even without that, that we fought two. Like our closest ally in the world right now is probably, you know, the UK and Canada is, you know, they're, they claim they're independent, but whatever. When, when the King of England wants to, he gets to wear his, you know, his Canadian outfit because they're still in the Commonwealth. So. So the U.K. we fought two wars against the U.K. you know, we, we fought for independence and then they invaded us again then. Right. So this idea that like that, well, things will never change is wrong. We are now close allies with people who are our bloody enemies. And we can. And look, and we fought alongside the Soviet Union in World War II. They were our, you know, they were the allies that helped us save Europe. And now they are. Then they became our enemies for a century and now weirdly enough, people think they're the Russia is our enemy again. But I will say that the world is a changing place. Rely for things that you absolutely need. You should not rely on somebody who's your ally today because you do not know that they will be your ally.

[Ryan Gradusky]

Yeah, it's such, it's such a great point. You know, if you look at the life of like Winston Churchill, he was born in Queen Victoria's, you know, empire the sun never set on. And by the time that he died, it was a dwindling, you know, nation of just an island.

[John Carney]

I mean you could imagine somebody saying very, very, very seriously, why do you need your own steel industry? Stalin can make your steel. It's in his name. He's the man. You know, like he's the man. Why do you need this? Right, yeah, no, we need it.

[Ryan Gradusky]

Well, so I have one bigger kind of. I think about this all the time. So when Trump is present the first time, we brought him 400,000 manufacturing jobs. But they were very, he was at a very laissez faire approach to re industrialization. Basically, if the jobs are going to Nevada or Texas or Arizona, great, as long as they're coming stateside. President Biden when he was president, believed in more of a place based economy through reindustrialization like the CHIPS act or The Infrastructure and Jobs Act. He wanted certain jobs to go to certain places. And he was very much heavily focused on having the weight of the government go to like Ohio or go to usually. Ironically, he pushed them a lot on swing states because he thought that he was running for reelection before that plan was re. Aborted. That plan was aborted. But, but what is your opinion of like, like place based economies versus more of a laissez faire approach? Because I don't see how you revive like the places that were devastated by NAFTA and the WTO bringing in China unless you have a place based economy.

[John Carney]

Well, so I think actually inevitably in modern economies you will have a place based economy. Me, ironically enough, Paul Krugman's done a lot of work on this, which is that when you have geographic concentrations of talented people who know certain industries very well, adds to it, China does this all the time. China's like benefits. If you ask like Apple, why do they make stuff in China? They don't say it's because it's cheaper to make in China. They say it's because of the geographic concentration of people who can make iPhones in that area. What they are worried about is like, can we get that to happen here? The question is, and I don't think I have a clear answer on this, is how much of that can you do just through a free market? Meaning will that happen inevitably, you know that you, it happened in Detroit more or less through a free market. There was some state intervention there, but meaning, you know, if you were going to start a new car company, you started it in Detroit because that's where all the people who knew how to build cars work. So I do think that there is a way of doing it maybe with less intervention on the other end. I'm not opposed to the intervention. If we, if we need to, let's do it. The thing that Biden did, and you point, you pointed this out that bothered me was we shouldn't be doing it with an eye to rewarding our, you know, favorite constituencies or trying to steal the other party's constituencies because I think it doesn't work out. You end up building factories in places nobody wants to go.

[Ryan Gradusky]

No, I, I agree with you there. It's just a greater idea of how do you fix places where without, you know, I think that there's a fairy tale in people's minds that like Arizona just all of a sudden everyone was like, let's move to the desert, when in fact we were putting enormous amount of a rocket business in Arizona. And the federal government played a huge part in making that state thrive.

[John Carney]

Houston, Texas. I mean, people.

[Ryan Gradusky]

Yeah.

[John Carney]

Talk about Texas as if it's this giant free market state. Florida, by the way. You know, I like. Yeah.

[Ryan Gradusky]

Huntsville, Alabama. These places that were revived in part because of the federal government. So if we're gonna put in this immense effort in. In my. That's why I said the center. Putting this immense effort in. And we're going to say, hey, let's recontract it. Well, okay. We could probably make aspirin in Youngstown, Ohio. We could probably go to these places that been just devastated by nafta, you know, GATT and the WTO and China. So why not put it in places that have been utterly just gutted, not like by, like, constituencies, but by people who really. They're in dying towns. And unless the federal government gets involved, their only, you know, exit out is through fentanyl or deaths of despair in some way. I don't. That's what I think about.

[John Carney]

I think you're. You're hitting on something really important. The other thing is there's actually excess labor in some of these places. Meaning, look, if you try to build your aspirin factory in San Francisco, you nobody shows up to work at. So you need the aspirin factory to be in Youngstown. You need Aspen factory to be in places that have lost jobs, because that's actually where the opportunity to build new industries is.

[Ryan Gradusky]

All right, John, I could talk to you all day, but we do have to go. Where can people read your stuff? How can they read your great tweets and everything like that? Give everyone your plug.

[John Carney]

Yeah, so. So the first thing to do is go subscribe to Breitbart Business Digest. It's free. We. It shows up in your mailbox every day. You can. You can read [e-mail] economy as well. But you really should subscribe because it, you know, like, you don't even have to look for it. It gets pushed to you. It's terrific. And we don't spam you with junk. So, like, you get to read Breitbart Business Digest. The. You can follow me on X. I am at Carney C A R N E Y. Got to sign up early. So I got, you know, my name.

[Ryan Gradusky]

Instead of the legions of other carnies.

[John Carney]

Yeah. Believe me, I still get people reaching out to me every now and then. Try. And when. When Mark Carney just got, you know, became the prime minister of Canada, people were tweeting at me because they thought well, he must be important enough to have.

[Ryan Gradusky]

That's so funny.

[John Carney]

Yeah, it's me. I actually woke up though, when on I guess it was Sunday morning when the when the Canadian Liberal Party had made him officially the thing and there were people like congratulating at Carney as Prime Minister of Canada. I was like, oh, last night must have been much weirder than I thought. Do I have to move?

[Ryan Gradusky]

That's so great. John Carney, thank you so much for being on the podcast.

[John Carney]

Thanks Ryan.

[Ryan Gradusky]

Thank you for listening to this week's episode of A Numbers Game. Please like and subscribe to the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. And send us an email for next week and we'll hopefully get to your.

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